Unit 3 · Creating Your Pricing Strategy · Lesson 3.2
The three steps in detail
The three steps are hedge, control and test: three price levels laid out across your booking window, which on a line graph look like a staircase. There are seven things to set: how long each step runs, plus a midweek and a weekend price for each. The framework is built for low season, and high season and shoulder season are handled separately.
The full lesson text below is an edited transcript of the video, published 2026-08-24. The complete course is free at the playbook.
From calendar to line graph
Most operators are used to seeing prices in a calendar: a grid of dates with a nightly rate sitting on each one, the way Airbnb, Vrbo, Booking.com and most channel managers present it. It is a clean way to show one piece of information per date, and it stretches to a second without getting cluttered: add minimum stays and the grid still reads fine. Ask it to carry more than that across a date range and it runs out of room.
A line graph carries what the calendar cannot. Unless you have used a dynamic pricing tool, seeing prices drawn this way is probably new. On one chart you get a recommended price for each date, your own nightly rates as a single line, and the rates being asked across the market at different percentiles, because not everyone in your comp set prices the same: some sit high, some sit around the average, some sit low. The chart shows where your rates currently sit against all of them.
Directly below it, on the same date range, sits a second chart for occupancy: a shaded band for how booked the market is on each date, and a second shade for how booked your own listing is. There is no way to show that in a grid of squares. That is the advantage of the line graph over the calendar view: your property and your market, everything you need in order to make a pricing decision, in one place.
Where the name comes from
The name is not simply step one, then step two, then step three. Plot your prices on a line graph running from today out into the future and the shape does the explaining. Close to today, the price sits low. At some point it rises to the control price, the price you know works for your listing in your market. Further out again, it rises a second time. Three levels, each higher than the last, drawn as a little staircase with three steps in it.
The seven things you set
There are seven things to decide, and it helps to see them before the detail arrives. The first is the length of each step: how many days the hedge step covers, then the control step, then the test step. The obvious question is whether you divide the 365 days between today and a year out into three equal periods. You do not, because that would make very little sense. Each step earns its own length.
The other six are prices, two per step. Most listings in most markets do not price midweek and weekend the same, so each step carries a midweek price and a weekend price: two for hedge, two for control, two for test. The length of each step plus those six price points is the whole of it, and that is the seven elements of a three-step pricing plan.
As an illustration of what the lengths look like in practice, with day zero being today: the hedge step running from today through day 10, the control step from day 11 to day 60, and the test step from day 61 out to day 365.
Reading the graph
The chart to picture has nightly rate in dollars up the vertical axis and the booking window in days along the horizontal, starting at day zero, which is today. A chart drawn out to 90 days makes the shape easy to see, and the same picture stretches to 365. Three lines describe the market. The green line is the 75th percentile, the higher end of the market rather than the highest. The blue line is the 50th percentile, the average price in that location. The orange line is the 25th percentile, the lower end rather than the lowest.
A grey dotted line runs across the chart at your current control price, say $280 a night. Remember what the control step is about: it is the level you have good empirical evidence for, the price your listing gets booked at, every day of the week. In this first picture every line is flat, which no real market is. Flat lines keep the steps easy to see, and weekends come in once the basics are covered.
Adding the test and hedge steps
Add the test price and everything beyond roughly day 55 lifts to a higher level, somewhere above $300, call it $310. Inside that point the control price still holds, because that is the level you know works. Beyond it, you are asking for more than you know you can get, which is what the test step is for.
Do not take the placement as gospel. A control price sitting just above the market average and a test price just above the 75th percentile is not the reality for every listing; it is a drawing choice, used to make the point and to keep the lines far enough apart to read. Your own levels come from your own listing and your own market.
The hedge price completes the shape. From day zero to somewhere around day 18, the price drops to a level just below the 25th percentile, under the lower end of the market. Then the control price runs through the middle as before, then the step up to the test price. Draw the three levels and the staircase is there: hedge, control, test.
What weekends change
Real markets do not price midweek and weekend alike, so the flat lines were a teaching convenience. Add weekends and every market line grows peaks and troughs: the 75th, 50th and 25th percentile lines all rise on weekend dates and settle back through the midweek. That is a far more realistic picture of the market price spread.
Your own three-step line does the same thing. Beyond the test point around day 55, the test step might sit near $310 midweek and $350 on weekends. Through the control step, midweek around $280 to $290, with weekends near $310. Inside the hedge step, midweek down around $245 and weekends near $260. The same staircase, now with a weekly rhythm running through every step.
None of this is meant to be worked out by eye. Nobody looks at a chart like that and derives their own step lengths and six price points from it; there is a defined process for arriving at those numbers. The picture exists to show what your pricing looks like once a three-step plan is in place, so the fundamentals are clear before any of the mechanics.
Why low season is the target
The three-step plan is built around low season. The whole basis of it sits there, and that is deliberate. Low season is the most neglected period for most hosts, for an understandable reason: high season carries the year, so a soft midweek in the quiet months feels like it does not matter. The weekends still book, the money still arrives, and attention goes elsewhere.
That neglect is exactly where the opportunity is. Peak dates already get careful attention from almost everyone in the market. The quiet months are where that effort has not been spent, and focusing there tends to do more for the bottom line than another pass at peak season. If conditions are tightening and you are wondering where the next lift comes from, low season is usually the honest answer.
High season and shoulder season
The three steps are not applied during high season. Suppose your low-season control price is $100. On a high-season date that booked at $400 a night a year earlier, pricing at $100 makes no sense whatsoever. Separate the two situations in your head: the three steps belong to low season.
High season is handled as its own situation, because demand is significantly higher and that allows a more aggressive stance. The decision there is positioning: whether to sit above the market, slightly below the top end, or somewhere near the average, depending on where you expect demand to land for that period in your market.
Shoulder season is a combination of the two. It is the period sitting adjacent to a major peak: if June, July and August are your high season, May and September are most likely your shoulders. More people are travelling and booking than in the quiet months, nowhere near as many as at the peak. The aim across those weeks is to maximise occupancy where the demand is genuinely good, without overpricing.
The shoulder that follows a peak is the easiest place in the year to get pricing wrong. You have just come off three months of strong rates and strong occupancy, so it feels baffling that a month later, with other listings in the market still getting booked, the same $400 a night is no longer achievable, and going all the way back down to $100 feels wrong too. That is the moment to be deliberate instead of reactive. The three steps are all about low season, and peak and shoulder periods get their own treatment.